December 16, 2017, was Chairman Phillip Miscimarra's last day at the National Labor Relations Board ("NLRB" or "Board"). Before leaving his post, Chairman Miscimarra, with the help of Republican Members Marvin Kaplan and William Emanuel, issued a flurry of decisions overturning many of the Obama Board's landmark labor relations decisions.
As we reported earlier this week, on December 14, 2017, the Board overturned Browning-Ferris and returned to the pre-Browning-Ferris direct control test to determine whether a joint employment relationship exists for labor relations purposes. That alert is available here. The Board also issued significant decisions regarding the standards applied to employee handbooks, "micro" bargaining units, and an employer's ability to make without bargaining unilateral changes consistent with its past practice. The key takeaways from each case are provided below.
New Standard Governing Workplace Policies and Employee Handbook Rules
In The Boeing Co., the Board overturned the standard it set in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004) for determining whether facially neutral workplace policies and employee handbook rules unlawfully interfere with the exercise of rights protected by the National Labor Relations Act (NLRA).
The Lutheran Heritage standard, which held that an employer violated the NLRA if it maintained rules that could be "reasonably construed" by an employee to prohibit the exercise of rights protected under the NLRA was often used by the Board, to the dismay of employers, to find unlawful a variety of common employee policies.
In The Boeing Co., the Board established a new test that will make such policies less subject to challenge and which is sure to be welcomed by employers.
Under the new standard, the Board will now evaluate two things when interpreting whether a facially neutral workplace policy, rule or handbook provision potentially interferes with the exercise of NLRA rights: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule. The Board will conduct this evaluation consistent with its duty to strike the proper balance between the justifications asserted for the rule and an employee's rights under the NLRA.
As a result of this balancing, the Board announced that it will classify rules according to one of three categories:
- Category 1 will include rules that are lawful either because they cannot be reasonably interpreted to prohibit or interfere with workers' rights, or the potential adverse impact on protected rights is outweighed by business justifications. As examples of Category 1 rules, the Board offered Boeing's no-camera requirement and "other rules requiring employees to abide by basic standards of civility";
- Category 2 will include rules that warrant further scrutiny as to whether they prohibit or interfere with NLRA rights, and if so, whether the adverse impact is outweighed by business justifications; and
- Category 3 will include rules that are clearly unlawful because they interfere with workers' rights in a manner that is not outweighed by business interests. As an example of a Category 3 rule, the Board included a policy that prohibits employees from discussing wages or benefits with one another.
The categories will represent a classification of results and are not part of the test itself. The Board further cautioned that although the maintenance of particular rules may be lawful, the application of such rules to employees who have engaged in NLRA-protected conduct may violate the Act, depending on the particular circumstances.
Applying the new standard, a 3-member Board majority held that Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit. The Board ruled that the rule's potential impact on the exercise of NLRA rights was slight and outweighed by important business justifications, such as national security concerns.
A copy of the Board's decision can be found here. The new standard will be applied retroactively to all pending cases before the Board.
NLRB Reverses 'Micro-Unit' Bargaining Standard
In PCC Structurals, 365 NLRB No. 160 (Dec. 15, 2017), the Board reversed the prior "micro-unit" standard, established in Specialty Healthcare, 357 NLRB 934 (2011), which required that employers challenging a proposed bargaining unit show that excluded employees shared "an overwhelming community of interests" with those employees included in the union's proposed unit. The Specialty Healthcare standard often allowed unions to organize smaller bargaining units in workforces where they lacked support from a majority of the larger workforce.
In PCC Structurals, the Board returned to its prior "community of interest" standard which examines whether the petitioned-for employees share a community of interest "sufficiently distinct" from the interests of excluded employees to warrant their own unit. The Board added that it may find the exclusion of certain employees from some petitioned-for units inappropriate, even when the excluded employees do not share an "overwhelming" community of interest with employees in the petitioned-for unit. The revised standard should make it more difficult for unions to carve out smaller, department-size units that omit employees who may share interests with the petitioned-for unit. Indeed, after applying the readopted standard to the underlying case, the Board found that a unionized unit of approximately 100 welders and "rework specialists" at a manufacturing company in Oregon was improper, and should have included all 2,500 employees at the company's facility.
Past Practice Regains Import In The Context Of Unilateral Changes
In Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017), the Board addressed what constitutes a "change" in employment conditions requiring notice to a union and the opportunity for bargaining prior to implementation.
While union employers cannot make unilateral changes to terms and conditions of employment unless the employer first informs the union of the proposed modification and gives the union an opportunity to bargain over it, the Board in Shell Oil Co, 149 NLRB 283 (1964), held that a modification to employment terms is not a “change” requiring notice and an opportunity to bargain if it is consistent with the employer's past practices.
The Obama Board overruled Shell Oil in E.I. du Pont de Nemours, 364 NLRB No. 113 (2016) ("DuPont"), stating that (1) a "change," which must be preceded by notice to the union and the opportunity for bargaining, included occurrences when an employer continued to do what it had done previously in situations where a CBA permitted the employer's past actions and the CBA had expired and (2) notice and the opportunity to bargain would always be required when the employer's actions involved some type of "discretion."
In Raytheon, the Board found that the DuPont decision was "fundamentally flawed," and that it distorted long-standing precedent and common-sense principles of what constitutes a "change" requiring notice and an opportunity to bargain. In overturning DuPont, the Board clarified the import of past practice on unilateral modifications, and a return to the Shell Oil standard, stating that:
Regardless of the circumstances under which a past practice developed—i.e., whether or not the past practice developed under a collective-bargaining agreement containing a management-rights clause authorizing unilateral employer action—an employer’s past practice constitutes a term and condition of employment that permits the employer to take actions unilaterally that do not materially vary in kind or degree from what has been customary in the past.
Applying this standard, the Board held that Raytheon did not violate the NLRA when, after the expiration of the parties' CBA and while negotiating a new contract with the Union, it made unilateral changes to the bargaining unit employees' health benefits in January of 2013, as it had done every year from 2001 to 2012. In particular, the unilateral implementation did not constitute a "change" requiring notice and an opportunity to bargain under Katz because the benefit plan modifications did not vary greatly from the changes made in other years, the changes were made at the same time of the year, and they applied to unionized/non-unionized employees alike (as had been the case in prior years).
The Board was clear to note that even when past practice permits an employer to take same or similar unilateral changes under the new standard, an employer is nevertheless required under Section 8(a)(5) to bargain with the Union upon the Union's request to do so over a mandatory subject of bargaining.
Because Chairman Miscimarra has left the Board and it will take some time for President Trump to appoint a new board member, we expect there will be some time before we see the Board overturning more Obama-era NLRB decisions. Nonetheless, when a new Board member is appointed, and the Board's Republican Majority is restored, employers should stay on the lookout for additional decisions from the Board changing the labor relations landscape created by the Obama Board. Quarles & Brady will be hosting a webinar on the recent changes at the Board on January 31.